Will ACOs make health insurance obsolete?

Ezekiel Emanuel and Harvard professor Jeffrey Liebman make a bold prediction for healthcare in a blog for the New York Times: “By 2020, the American health insurance industry will be extinct. Insurance companies will be replaced by accountable care organizations — groups of doctors, hospitals and other health care providers who come together to provide the full range of medical care for patients.”

And how will ACOs accomplish this?

“Because they will each be responsible for a large group of patients (typically more than 15,000), they will pool the risk of patients who have higher-than-average costs with those with lower costs. And with the end of fee-for-service payments, insurance companies will no longer be needed to handle complicated billing and claims processing, nor will they need to be paid a fee for doing so. Payments can flow directly from an employer, Medicare or Medicaid to the accountable care organizations. ACO’s will require enhanced information systems to track patients and figure out how to deliver more effective care, but this analytic capacity will be directed at improving health outcomes, not at imposing barriers to those seeking treatment.”

Health insurers, of course, are getting in the ACO game, with partnerships between payers and providers for holistic care popping up across the country. While ACOs are in the developmental stages, the authors argue that ” if they don’t want to go the way of the dinosaurs, insurance companies will have to find a new business to be in, one that is useful in the new world of coordinated care.”

Read their full article at: http://opinionator.blogs.nytimes.com/2012/01/30/the-end-of-health-insurance-companies/